Unclaimed Payroll Check

Unclaimed or uncashed payroll checks handled incorrectly by an manager can corollary in serious problem for the employer. Prior to implementing a procedure on how your enterprise handles these types of checks, there are some issues to consider:

Every state has escheat laws that influence unclaimed or abandoned property. In general the laws want that such property, together with the funds from uncashed and/or unclaimed payroll checks, be turned over to the state after a designated period. That period and perhaps a minimum number vary from state to state. The state then holds the items for the owner or heirs until a claim is filed to fetch the property.

Unclaimed Property

If an uncashed payroll check is voided the money is then ready in the company's payroll checking account. If later the funds are not ready to pay the worker or to submit to the state the, manager and officers could find themselves under a breach of fiduciary responsibility. If the courts find the actions intentional the court could find criminal intent. Remember once you issue a check for wages to an worker those funds no longer belong to the enterprise in any way. Under no circumstances should the funds from uncashed paychecks be returned to the general checking account.

Even if the worker never claims the money or cashes the payroll check the worker deserves prestige on his social safety and Medicare accounts for wages earned. The wages also need to be reported as paid for unemployment purposes and unemployment tax needs to be paid. Even though the worker did not authentically cash the check, the wages are determined to have been paid during the tax year in which the check was dated

The enterprise must report these wages on the 941, 940 and W-2 forms and pay all taxes that are due as if the uncashed unclaimed payroll checks had been cashed on a timely basis. State unemployment reports and taxes will also need to be filed and paid as if the payroll check was cashed.

Your enterprise procedure should consist of the following items at a minimum:

A recipe of collecting, reporting and safeguarding unclaimed payroll checks and recording and tracking uncashed payroll checks,

An frame of the steps to be made and the recording of those steps in attempting to perceive the worker who has not cashed or not claimed a paycheck,

The specific period of time, which may be prescribed by the State, after which the payroll check will be voided and the monies escrowed pending cost to the worker or the state. The recipe and place where this will be recorded,

The period of time, which will be prescribed by the state, after which the monies will be forwarded to the state.

The recipe and place where this cost will be recorded.

Unclaimed Payroll Check